Confirmation
Observable evidence, defined in advance, that a setup is doing what you expected before you commit.
Full explanation
Confirmation is a specific, checkable event that must occur before you act. "Wait for confirmation" only means something if you have decided beforehand what would count.
Common forms include a candle closing beyond a level rather than wicking through it, a successful retest of a broken level, or a pullback holding above the previous low before the trend resumes.
Confirmation always costs something: you enter later and often at a slightly worse price. What you buy with that cost is a much lower rate of entries into moves that were never real.
Why traders watch it
Most impulsive losses come from acting on the appearance of a move rather than its completion. Confirmation is the discipline that separates the two.
The Trading Plan is written so that every behavioural instruction names the confirmation required — a close beyond a level, a held retest — rather than leaving "wait for confirmation" as an empty phrase.
Trading considerations
- Define what would count as confirmation before the session, not during it.
- If you cannot state the confirming event in one sentence, you do not have one.
- Missing a trade because confirmation never arrived is the system working correctly.
Educational guidance only — never a trading signal or recommendation.
Related indicators
Drawdown
Drawdown is the fall from an account's peak value to its subsequent low, expressed in money or as a percentage. It measures the pain of a losing run rather than the final result. A 20% drawdown needs a 25% gain to recover, and the deeper it goes the harder recovery becomes, which is why controlling drawdown matters more than chasing returns.
Entry
The point at which you open a position — chosen in advance, with a defined trigger and invalidation.
Risk-controlled plan
A plan where the loss on every trade, and for the day as a whole, is decided before the market opens.
Risk-to-reward ratio
The comparison of what you stand to lose against what you stand to gain on a trade, calculated before entry.
Stop loss
A pre-set order that closes a position once price proves the idea wrong, capping the loss.
Take profit
A pre-set order that closes a position at a chosen objective, taking the gain automatically.